just four trading days left in 2012. the s&p 500 on track for its best yearly performance since 2009. it is wednesday december 26. "squawk box" begins now. ♪ good morning and welcome to "squawk on the street" on cnbc, i'm here with joe kernen, becky quick is enjoying time off today. our guest host, contributor dan greenhouse, a chief global strategist with btig. he's going to be with us throughout the program. and merry christmas. and -- >> same you to, as well, sir. and other holiday greetings. >> we don't pay you a lot for cnbc contributor, do we -- did we order you to be here? >> i'm contracturally obligated to not specify anything. >> not specify anything? here at 5:30 and all the way to

9:00. >> i knew that there would be trouble this morning. i got myself seated -- >> good. we'll squeeze you for everything you're worth. we needed a big name. >> big name. we got one. >> it day after -- for december 26. >> you're too kind. >> then here you are. >> here he is. >> what did you get? anything good? >> i have -- >> switch, lump of coal? >> he's a hanukkah guy. >> a lump of coal -- yes, but a lump of coal at some point probably worth something. tet rate we're going. >> that's right. you're -- no tree? >> i want a tree, my wife says they're too messy. >> the trees are messy. >> the needs needles -- >> you have the festivus pole. >> grievances -- >> you better go, sorry. let's do the main headlines this morning. of course, there's only one main story this morning. it's a familiar one. the looming fiscal cliff. aides for both parties now saying a partial agreement or patch probably the most that we can be expecting before january 1. >> i think we're dealing now

with whether or not we can put off the -- the increase in tax rates. that's really all we can deal with now. >> the next session of the senate is now set for tomorrow. the house has nothing on its schedule for this week. members have been told they could be called back within 48 hours' notice. meantime, and this i guess is also the big news, the white house saying the president's going to be flying back from vacation in hawaii today. a lot of people making something of that. i don't know what it means ultimately. >> well, one thing it means -- >> a show of something. >> if i had to get back from hawaii at a minute's notice, you know what it would be. the president will have an easier time of it, i think. right? >> i noticed a couple of news reports saying the cost of the last-minute flight is about $250 -- >> he's the president, he's allowed. he's not going to be like in -- you know, transferring in san francisco or l.a. or something. and hoping that flight isn't -- i think he can just sort of -- >> the good news. >> he can probably work on the way back. >> yeah.

no -- >> at his desk or do what, you know, whatever. he may be able to play sports. there's no basketball court on air force one. right? or putting green? >> no. but i think that -- they might have an xbox or something. >> yeah, if we play virtual golf or -- hoops or something. all right. as for the markets, stocks turning in double digit gains in 2013. nine of the 10 s&p sectors looked in positive territory. only utilities are going to finish in the red at this point. u.s. equity futures this hour, not too bad. if the cliff was -- just, you know, end of the world -- i mean, we did make it through that. i guess people are optimistic that we're all still here in the flesh. we don't know at this point whether the mayan me to you're -- the end of the world could have involved a zombie apocalypse. you wouldn't know at this point whether the first zombie was actually somewhere right now -- >> someone has to be the first zombie. >> someone has to be the first one. then it spreads slowly.

and that's -- could have been like that. see, that's how i thought it would end if it ends. not with a comment. but i did have a roll of quarters in my pockets, ready to go. >> are zombies not immune to rolls of quarters? >> no, in case the guys outside the planet that runs into us -- >> it depends on what type of zombie you get. if you get the walking dead zombie, i think we could deal with. that they're quite slow. >> they're not upstairs -- >> if you get the zombies from -- from -- i'm forgetting the name of the movie now -- >> "i am legend." >> no. i'll think of the name. they run. >> running zombies are worse. especially if they go upstairs. and if you lock -- if there's like a chain link fence with a chain and a lock, they can't get through there. >> "29 days later." >> i haven't seen it. >> it's scary. the zombies run, and they made a sequel, "28 weeks later."

>> how long -- >> ten weeks? we'll go to commercial. stay with me. asian stocks rising overnight. the nikkei nearing a 2012 high. tell never hit an actual all-time high again. anyway, among the catalysts, a new pro-business government preparing to assume leadership, incoming prime minister shinzo abe. what is it, 50,000 that it has to get to? >> 39,000 i believe is the peak. >> who's counting, right? that's a ways off. >> yeah. far away. >> shinzo abe has been putting pressure on the bank of japan to raise its inflation target in hopes of extricating the country from two decades of deflation. i guess if you just raised the target -- >> that would help. >> okay. >> it doesn't matter what your target is if you can't hit it. >> we found that out here. meantime, in europe markets are closed for the boxing day holiday. seems weird to do it just for a bunch of people to -- >> box up the gifts and return them. >> it's not a -- >> bad, i know. >> it is boxing.

what kind of boxing are we -- boxer rebellion? >> i've never understood boxing day. >> we have to look it up. >> i literally have no idea. >> or it's on google. no, is there anything on google that is different? let me see. just a regular -- >> is there their our way to figure out what's going on in the world? >> yeah. google, whatever it has. as for the broader markets, let's take a quick look at oil. just been quiet. 89, sort of 85 to 90 for a while. yeah, google's back at its normal look today. the ten year at 1.777. the dollar which has been fun to watch, one of the areas where something's happening. euro back to $1.32. and it's been interesting to watch with the yen with all the comments coming out of it. and gold, i'm going to be right. i'm going to be right. didn't go -- look at that. like nowhere near 2000. that was -- i had to make the prediction last year. the gold, everybody said it was going over 2,000. everybody in the world a year

ago thought it was going over 2,000. >> did you bet on it? >> i didn't really boat. i was -- in print saying that gold would not go over 2,000 -- >> will it get there. if ben bernanke gets his way, it will get there. >> it went from 200 to 1,800 knowing what bernanke was going do. but you're right because it's a beg thy neighbor. everybody is printing -- >> at the core of what the fed is trying to do is phillips curvean in that they're trying to trade short-term gains in unemployment for modest upticks in inflation. if they get their way, presumably the gold bowls will come back out of the woodwork. >> if it goes from 200 to 1, 800, it's anticipated. >> how much did that suit cost? >> not very much. tie's a different story. >> not $1,800? >> no, not $1,800. >> you should be able to buy a suit for an ounce of gold. that's always been the -- >> i was not aware of the suit-to-gold ratio. >> suit-to-gold ratio. you -- never, never been your --

>> suits -- >> you've always need good five or six troy ounces to buy -- >> you buy a brioni suit, can you pay in gold bars? >> that's how i usually do. it. real quick, boxing day according to wikipedia, traditionally the day following christmas when servants and tradesmen would receive gifts from their supervisors. this was an old english tradition apparently when servants would wait on their masters on christmas day, the servants of the wealthy were allowed the next day to visit their families. the employers would give each servant a box to take home containing gifts and bonuses. and sometimes leftover food from christmas day. >> kidding. sounds like the type of holiday we shouldn't have anymore. probably not. >> are you all caught up on "downtown abbey"? >> no. halfway through season two. do not tell me the rest -- >> lord granthem looks like he's about to give a gift to one of

the maids, if you know what i'm talking about. where that came from -- i have no idea. just out of nowhere. boom. just -- >> last night telling us about that. >> about that? >> no. how the show has veered into -- into -- >> soap opera -- >> no, more "as the world turns." >> you know, matthew, someone tripped and he immediately stood up and caught her. he was -- he had soap opera paralysis. the other guy had soap opera amnesia. and soap opera burns. there's -- >> it's a beautifully -- beautifully shot. it doesn't look like "as the world turns." >> i'm not a fan -- >> we're all fans of susan lucci here because we had her on the program. let's talk about retail shopping business and something other than our favorite tv shows. numbers starting to come in on holiday shopping. so far, the results should admit are less than stellar. mastercard advisers' spending pulse saying that holiday sales increased .7%, that's it.

analysts had expected sales to grow 3% to 4%. among the reasons cited for the weaker numbers, superstorm sandy and consumer nervousness about tax hikes due to the fiscal cliff. we've had lots of conversation about whether not fiscal cliff would impact consumer sentiment. and apparently now it's actually hitting people in the wallet. let's talk about what's on the economic agenda today. one very important report to watch, standard and poor's releasing the case schiller index on october home sales at 9:00 eastern. it's a busy week for housing data. tomorrow we're going to be getting the commerce department which releases new home sales for november. then on friday, the national association of realtors, not realtors -- >> yeah. >> releases its spending. its pending home sales index for november. >> in other housing news, the obama administration is considering expanding its mortgage refinancing program to include borrowers whose mortgages are not backed by the government and who owe more than their homes are worth.

"the journal" reports one proposal being considered would also transfer potentially riskier loans that are held by private investors into fannie and freddie and transferring billions of dollars of mortgages to the government-backed mortgage companies would require congressional authorization and temporarily change the charters of fannie and freddie. does that sound like something -- a kid -- >> i don't know if it's good or not. >> all the stuff that's not covered now. you need -- >> yeah -- >> put it into fannie and freddie again. expand their balance sheets. i don't know. >> you have a view? >> how much was the tie? >> i don't want to say. >> really? >> was this a christmas tie, holiday tie? >> no. getting back to your question -- >> go ahead. >> fannie and freddie. look at that -- >> beautiful tie. >> punting. he's stalling is what he's doing. >> this is -- >> we're a three-hour show. take your time. >> no. >> come up with something. >> yeah, clearly this -- i have to look more to the program. but you know, there's something like 11 million homes that are under water. and clearly -- >> you -- even though you call yourself a libertarian, you're

ready to do things like this. >> i am ready to wind down. i think it's pretty clear -- >> i thought you were ready to wind it back up -- >> no. >> you don't want to do -- >> i work through what i like to call fact-based prism, i.e. reality. there are a number of developed economies, canada being the closest, that have similar homeownership rates in the united states and don't have nearly the level of government intervention, whether it's the mortgage interest principle, freddie and fanny. i think pretty clearly -- you don't want to rip the band-aid off so to speak, but a ten-year winddown two of programs that are largely speaking generally unnecessary is probably not the worst idea in the world. and there's nothing to say that if you close disruptions you can't slow down the process. you can't ramp it back up. you can't adjust the program, you can't reinstate one. clearly what we've been doing is not necessarily a -- working to -- >> what about the -- you don't know about continuing. should we have been doing a lot more for mortgage reifinancing o try -- does it -- >> to the extent that you're going -- >> is it less than the time that

we have this problem, or does it make it longer -- >> to the extent that you're going to have government involvement into the economy, then earlier on in this recovery than it -- number one area that you could have tackled rather than health care or any other area would have been and possibly should have been the amount of mortgage debt outstanding. mortgage jet represents the vast majority of household debt outstanding, and if the debt overhang, if deleveraging, if the whole idea was the prominent and primary concern that the economy was slow, well going directly after that. for instance, the joke i like to tell in meetings that gets everybody riled up, the president proposed this $450 billion jobs program. obviously went nowhere. in theory if you really wanted to stimulate the economy, take the $500 billion or so and randomly pay off people's mortgages. rather than the slow shift of private sector debt to public sector debt. just do it in one fell swoop. >> people that -- that were behind on their mortgages. >> just random. your mortgage could have gone to zero. my mortgage could have gone to zero. some -- >> even people that didn't need help? >> you have to do it -- i mean

-- >> randomly -- >> appear in -- in reality you would do it, only people under water. >> more rewarding -- >> to make it more tolerable, you do it randomly and get a sflus to the econostimulus to t. it's anathema to what i believe. in theory, if you wanted to stimulate the economy, earlier on that was the way to do it. >> okay. that's one way to do it. we'll continue the conversation and more. let's get you -- probably not. let's talk about the corporate news. samsung electronics is filing a complaint against erickson with the u.s. international trade commission. samsung wants a u.s. import ban and sale ban on some of the swedish company's products. samsung is accusing erickson of breaching seven of its patents. and netflix customers can again stream video, hallelujah. are you a netflix customer, anybody at the table? no, sounds like not. the service did go down midday on christmas eve and was out until yesterday on christmas

day. netflix blames problems with amazon web services. always basess on. the -- bezos. the company that provides online storage and computing. and this is interesting if you have been following the herbalife story. they're working with the law firm-by-schiller, in connection with the fight with billackman. shorting the company. last week he revealed he had been shorting the stock. the "wall street journal" saying it's not clear what counsel the corporate litigator could be offering herbalife, you can imaginin it's going to get tough and aggressive. at some point we've got to talk about julian -- julian robertson on twitter. if we'll consider that a headline. if he's on twitter -- >> did you know about this? >> no. >> there's a handle -- >> i've seen other people that it's obviously not them -- >> this could be him, though. and there's a big debate. a raging debate going on line about whether julian robertson

is actually tweeting or not. you have a view? >> i -- i'm going shy away from this conversation other than -- >> we need to find out, though. >> other than to say it's a raging debate. >> i e-mailed him. this julian robertson -- >> how do you know you're e-mailing the right one? >> wow. >> because i have e-mailed with him previously. so i believe it's a verified address. i believe it's a real address. the e-mail address is real. the twitter thing i'm less -- >> he was actually e-mailing with michelle cabrera -- >> what's weird about his tweets? >> he's tweeting. he's tweeting it all. he's big on apple. >> and he -- >> he said he went on, i'll pick it up -- >> he doesn't have a social person like we have here telling me to tweet? he -- someone could be telling him he needs to tweet every day now. >> correct. >> might be him. he might have just started tweeting, right? >> he was using hash tags right away. >> i never used a hashing to. >> it seemed like he knew what

he was doing. >> robertson writes, "refuses to retire, go to court, or abandon my tiger cubs. author and husband who just misses his life partner. salisbury, north carolina." you would think that's him. has picture and everything there. >> you would. >> i mean, how could anybody know that about him or get his picture? >> right. >> yeah. that could easily do that, but it would be mean to talk about life partner. >> he says apple is the stock of 2013. one of his tweets. mentions maria bartiromo, says did an interview with maria in late october talking administration, mit, and stocks. great girl. he writes another tweet. asked all night since joining here is bill ackman wrong with herbalalife, i believe he is. >> we should preface this by saying there's no -- >> he's communicating with michelle caruso cabrera at one point over twitter. >> yeah. i don't know. >> he's very active.

it must have been a slow night in the robertson house. >> total ruse, question mark, question mark. just like your take on hlf cmcr to mention a few. >> green mountain? >> obviously. who is he referring to? >> someone may have said something. >> like a reply. if he's using hashmarks, what do you use that for? >> that's how you delineate a chain of -- a discussion. so everybody can use the same hash tag and see what other people are saying. >> no kidding. that's why i always see those weird things at the end that make no sense. >> yeah. >> really? >> like hash tag, what i'm talking about. >> should i use that on all my tweets? yeah. >> i don't -- hash tag, i don't understand twitter. if somebody wanted to respond, they would also say hash tag, i don't understand twitter. >> anyone in the twitter universe -- >> you could click it and see everybody -- >> never mind. you lost me already. >> we're losing viewers by the minute. >> yeah. coming up, looking for alternative investments. maybe julian robertson is why some traditional valuable wines were less than stellar bests

last year. plus, christmas day storms spreading snow and twisters across large parts of the country. we've got a live report from alabama where some of the tornadoes hit. but next and first, we are going to head to this break. small business ceo in her own words. take a listen. >> my name is mary morales. i am the ceo of seychel embroidery in hollywood. we are the top embraider are. our christmas sales have dropped. we are holding on to our money, we're not spending as much as we did last year at christmas. we would love to see somebody that just forgets the democrat, forgets the republican, forgets about any party lines and just does what is right for the people. this is america. we don't let frequent heartburn come between us and what we love. so if you're one of them people who gets heartburn and then treats day after day...

block the acid with prilosec otc and don't get heartburn in the first place! [ male announcer ] one pill each morning. 24 hours. zero heartburn. and don't get heartburn in the first place! excuse me, sir i'm gonna have to ask you to power down your little word game. i think your friends will understand. oh no, it's actually my geico app...see? ...i just uh paid my bill. did you really? from the plane? yeah, i can manage my policy, get roadside assistance, pretty much access geico 24/7. sounds a little too good to be true sir. i'll believe that when pigs fly. ok, did she seriously just say that? geico. just click away with our free mobile app. what starts with adding a friend... ♪ ...could end with adding a close friend. the lexus december to remember sales event is on. this is the pursuit of perfection.

welcome back to squawk"squa the street." dow jones would open 20 points higher. s&p 500 up about two points. making headlines, wine sales at auction houses were flat to lower in 2012. lower prices for the top, bore day weighed on -- bordeaux weighed on results -- i'm going to not pronounce this right. >> burgundy?

>> burgundies have long been in short supply. did you know that? >> no, i know those are the expensive ones, and i know how to pronounce burgundies. what part was throwing you off, the r, g, ies? what part was throwing you off, andrew? >> i don't look at the word burgundies as a plural. like a burgundy -- what would be plural? burgundi? keep reading. your mind is mush. >> it vaulted to new peaks, but the burgundies could not make up for the bordeaux -- >> uh-oh -- you did it. >> it's interesting now that we have the new teleprompter which i don't know that the viewers know, the words wrap in strange ways. for those of us -- >> they do. >> i had a tough time reading aloud in school. that was when the words didn't move. >> as a child you had a tough time reading out loud? >> nice to concern -- >> hey, did you get anything that you're not going to take back from your wife this -- this year for christmas? >> for christmas? >> you know how you said --

>> right. >> you have to take -- >> right. >> instigating? >> i don't know what we got. in global news, the obama administration is formally proposing a controversial sale of advanced spy drones to south korea. they've requested a possible $1.2 billion purchase of four northrup grumnot rq4 global hawk remotely piloted aircraft with enhanced surveillance capabilities. >> cool. >> that's what i asked for. didn't even get one. they want four. and egypt has banned traveler from carrying more than $10,000 in foreign currency in or out of the country. officials worried about pressure on its pound currency. and a rush by egyptians to wow savings from banks. and dock workers that we talked at four pacific northwest ports have moved closer to a possible labor clash with grain shippers. meantime, the parties in a larger separate dispute at 15 east and gulf coast ports have agreed to mediation. the ports face a strike deadline

set for december 30. and a new jersey pension fund is suing the nyse euro next or its proposed $ 8.2 billion sale to i.c.e., saying it undervalues the company stock. the lawsuit seeks class action status on behalf of other shareholders and aims to block the sale. another case of just -- you know, too many lawyers, too little to do. and -- or not. i'm just -- we should put commentary on that. shouldn't we? but every time any deal is announced, there's always going to be some shareholders that wish they got more. and there's going to be a willing lawyer to say, okay, i'll take the case. >> pretty healthy premium. >> yeah. exactly. but that doesn't mean a lawyer -- >> it may not be enough. >> it's never enough. if you're going to wear a brioni tie. nice. did i out you? >> why, are those really expensive? >> no. it was a gift. my god. we got to zoom in? >> i mean, it's quite a thing to

behold. >>. i don't think so. >> i think we ought to bump in and out -- >> i think every -- it's a beautiful tie. >> do you remember i also have the bernanke tie, where he's throwing money out of a helicopter? >> i have one, but i have one where -- this year's was bernanke and draggy. >> both in a helicopter? >> both bernanke with the helicopter but euros and dollars falling. >> that's -- that's -- >> up to date. >> i never got one of those. nasty story. i thought we were going to have a white christmas, christmas eve. were you driving around? a nasty winter storm hitting many states in recent days. jim cantore in mobile, alabama. twisters hit yesterday, quite a few, i think, right, jim? >> reporter: yeah. the storm prediction center says 34, our severe weather expert who tracks tornadoes and sees which are duplicated says 19. which for whatever it's worth is a record day for tornadoes on christmas. the previous record was 1969

with 12 tornadoes. guys, here's the deal. now we have tornado season in the middle of winter. and that seems to be what happens nowadays. you see behind me this church was pretty heavily damaged. look at the roof. two sections ripped off. then dropped below. and given the fact that this debris was just dropped off down here, i'm going to probably estimate these winds somewhere in the 90 to 100 mile-per-hour range. so probably ef-1, maybe ef-2 damage. they typically go along the tornado path and look at the damage to assess an actual rating if you will in terms of what that damage is. behind me, a lot of cleanup here on dauphin street. the crews will be cleaning the debris. you see the power lines hanging over. draping over there. some of the trees are pretty big. it's going to take a while to get these out of the way and get this road passable and get the power back on. oftentimes the trees come down, they hit the lines, they pull the lines from the house. that's pretty much a project for many today. i'll tell you, i think yesterday morning when people got up and thought, wow, this is going to

be a great christmas day, unfortunately, they're not even in their homes tonight because of a cold night and power loss because of a record day in tornadoes. back to you. >> jim, how high does the ef go? >> reporter: ef-5. that's winds over 200 miles per hour. over 300 miles per hour potentially. >> 300? all right. no one wants tornadoes on christmas. thanks, see you later. okay, coming up, deal or no deal? that's the question. we're going to talk fiscal cliff expectations and what d.c. negotiations could mean for the final few trading days of 2012 when we return. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade,

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good morning and welcome back to "squawk box." i'm here with andrew and our guest host, contributor dan greenhouse, he was here at 6:00. he's going to be on right through closing bell. today's -- no? >> i will. i might read off the prompter. you never know . the top story, the looming fiscal cliff. the top story really is the brioni tie -- >> i wanted to make a good impression. >> you did. no, if you haven't heard there's a thing called the fiscal cliff. it's -- tax hikes and -- spending cuts that will in come on january 1. and they have done nothing to

avert this. both parties say a partial agreement is probably the most that can be expected before january 1. here's a look back at some negotiations that we saw and some key developments that no one has risen above. >> the fiscal cliff, yes, it is still loom figure you're wondering. >> i think we could be taken to the brink again. >> the market is responding to the pending fiscal cliff. >> businesses have stopped investing. business has stopped spending. business has stopped hiring. >> nobody knows what's going to happen. there's outlandish guesses on both sides. >> it wouldn't surprise me if we go past january 1. >> you can't tax your way out of this. you can't cut spending your way out of this. you can't grow your way out of this. >> another two million people will lose their job. unemployment will go to 9%. why would we do that? >> president obama is meeting with high-profile officers today -- >> we don't speculate but we know the consequences of failing to reach an agreement.

>> we're here to support doing the right thing and putting america back to work. >> we've got to make sure that taxes don't go up on middle-class families. our economy remains strong. we're creating jobs. >> it's time for the president and democrats to get serious about the spending problem that our country has. >> is the administration prepared to go over the fiscal cliff? >> oh, absolutely. >> how about we stop the press conferences, statements, speeches, stop the personal and political attacks? >> people have different views. i'm willing to compromise. >> the president keeps opening doors for the speaker to go through. with the action that the speaker announced, it slammed the door in the president's face. >> time's running short. i'm going to do everything i can to protect as many americans from an increase in taxes as i can. >> are you guys just incompetent or what? i mean, if you can't do this, if you can't do what the american people pay you to do, why don't you just step aside and put somebody in there that can get a deal done? >> we are one decision away from restoring our fiscal and moral authority around the world.

let's just do it. >> is jpmorgan taking any steps in preparation? >> we're praying. >> call me a hopeless optimist. but i actually still think we can gets it done. >> so what does the lack of a fiscal cliff deal with just days left in the 2012 mean for the markets? joining us from the cme, kevin ferry of cronis futures management. it's sad to watch all those clips back to back and realize where we are today. >> it's tough. mar's comments really ring perfectly at the end of that. that's for sure. >> and so just sort of set us up for the market day or maybe even the market week to the extent we have one left. how -- how do you think about the way the market may trade given the fact that we may have next to no deal likely i think before january 1 or at least in we do it's a baby. baby deal. >> right. right. well, here's what -- here's what we're observing so far, andrew.

that the only significant move that we've really seen from the market has been the nighttime move when they walked away. and the rest of the session was actually quite quiet. so as far as the u.s. markets really putting pressure on the deal, we think it's been kind of void. so the real key, the trade that everyone now is listening, everyone seems to be on board so watch for some unwind is obviously the yen. and that's the real significance is that the declining yen has also been significantly pressuring the back end of the yield curve with bonds going down. so that's pointing out -- we've just opened at 5:00 a.m. central time. things are just starting to go here. i'd be watching for that trade in the back of -- of the fiscal cliff deadline. and certainly i think that the risk now is that the u.s. markets actually put some

pressure on the negotiations. >> so when does that happen? the reason i ask is you look at the front page of the "wall street journal," i'm looking at the lead story, business section of "the new york times." "fiscal cutoff gradually morphs into fiscal horizon." than we get a deal january 1, 2, 3, but people talking mid-january, talking about end of january. i saw one of the pieces, early february for the first time. >> early february. right. >> i thought the markets were supposed to be going into sort of t.a.r.p. style dives by now. when does that happen if it does ever? >> yeah, well, i would still say, you know, as i said a couple of weeks ago, if that's going to happen i would stay probably bo probably goes into february when you bring in the debt ceiling. i think one of the most dangerous statements made i think last week was just when they said, well, we're willing to do a small deal now and really hammer this home in another debt ceiling debate.

and i think -- if that becomes the mode usond reven-- the mo mos eperendi, it will weigh more negatively. the bottom line is, the data's been good. i'm not saying that the market's done the wrong thing. >> quickly because we got to go, my sense and great worry is that people saw what happened during the t.a.r.p. negotiations to the extent we think those are comparable several years ago which they may not be. people said i saw that dive, and i -- i -- i don't need to do that again. and i don't want to lose money doing that again. so i'm going to hold on. meaning, meaning there's not going to be this sort of massive sell-off because of what happened, because that experience is still so raw. >> that's a good point. i would also say the market is not nearly as geared as it was before. >> right. >> there's one nice buffer under this whole thing. mom and pop, john q. public have stayed in the bond market and

safe for the past year. so their ability to get banged around pby this negotiation has been limited. let's get it out of the way, keep the economy going. that's the thing. the focus has got to get back on keeping the economy going. so look for choppy stuff. but i would agree with your assessment, it's probably not going to be another complete disaster. >> okay. kevin ferry, merry christmas the day after. good to see you. >> okay. thanks for having me. >> love the sweater. expensive. you don't love the sweater? come on. >> hey. nice looking sweater. fine. comments, questions about -- >> nothing like the brioni tie. >> i like sweaters. you know, you don't wear those. >> i may. i may. >> if you have comments or questions about anything you see, e-mail us at squawk@cnbc.com. coming up, the outlook for health care in 2013. here's a hint -- think taxes. [ male announcer ] citi turns 200 this year.

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time to prep your portfolio. bertha coombs with what's in stoke for the health care sector in 2013. >> reporter: the rollout of bicycle care will weigh heavily on health care services, medical devices, and health insurers. hospital stocks the best performers in the health care sector in 2012, likely to be volatile and vulnerable in 2013. new medicare rules peg reimbursement rates more to outcomes rather than just the number of procedures. for insurers, 2013 will bring more m&a to diversified business

as u.s. profit margins are kweezed by regulation and competition -- squeezed by regulation and competition. the acquisition of brazil's largest health provider will likely push others to hunt for more international growth. medical devicemakers face a 2.3% excise tax starting in 2013 under obama care. it's been a headwind for stocks like boston scientific and stryker. any kind of reprieve on that rate is going to be a positive for the sector. the biggest story of the year in health care will be the build-out of the state health exchanges. the federal government has to build 32 of them for states opting out, along with a complex central data hub to manage eligibility and subsidy payments. it will be a little short of a miracle to get the online insurance marketplaces up and running smoothly by october 1 when millions of uninsured americans are supposed to start signing up for bicycobama care coverage. >> joining us with the outlook for health care for the next year, fund manager with holly

wog. how you doing? >> okay. >> more of the same this year for the winners last year do you think? >> i think it's going to look a lot of the same. you know, this year was a particularly good year for biotech. i'd be surprised we repeated that. i think it will be okay for that sector. and obviously as your intro said, it's going to be all about implementation of obama care. >> the sectors -- and i guess there were questions last year. we had the supreme court ruling that we were waiting for. we had the election which impacted whether obama care was going to stick around now. the law of the land, looks like it will stay. although you read thing about other challenges, i don't know how likely that is. but for most of the year were people assuming it was going to stand up to all of these? >> actually, for most of the year i think people were thinking it was going to be overturned. especially around the supreme court. >> yeah. >> and there was also the presidential election. and you saw a lot of movement around, you know, these events. >> what finally benefited it when it became clear it was

going into effect? >> managed care. >> is that going to continue? >> did well. and hospital did well. but that was offset by economic factors. yes, likely to continue for both. i think depending on economics, and that will be dan -- dan's will but hospitals will be more dependent on economics. >> managed care gets $30 million now? >> $30 million in 2014. we may drift for a while in managed care before we get to '14. and pharma is all about drugs, new drugs, new profits. >> right. do you macro look at the obama care taxes as being a headwind? >> sure. it's 3.8% on not marginal income tax rates. it's unearned income. but whether it's medical device tax, a question i was going to have for les is whether he sees any delays. do you see any delays in any of the implementations of these. obviously whether it's in minnesota with respect to the medical device tax, senators are

talking about delaying implementation until they study this further. do you see that happening? >> seems unlikely. i mean, i know as an ex-minnesotan that they would love to see this tax go away. i'm not sure that that's in the cards. i think it's a fait accompli. it will take longer than people think leading to chaos. in 2014, states that don't expand to medicaid, it's going to leave people in the hole in 2014. i'm not sure how these people will afford insurance without the subsidies. that's 2014, we'll come back next year and worry about that. >> pharma tech has nothing to do with obama care. >> absolutely not. that's why it's done well, between drugs and interest rates. >> so it had nothing to do with -- although it did -- did it escape any type of worries about when you would use -- change the patent protection for biologics?

where are we? >> we're still at 12 years. >> yeah. >> and that doesn't look to be changing. even ed kennedy when he was around didn't want it to change. so i think that -- biotech's a protected industry. one of the things we invest in at polliwob, especially early stage. those are things that you care about the science and less about the politics. >> do the -- does the specter of any type of price controls for pharmaceuticals, is that on the horizon for this country, or are we -- will we still lead the world in innovation because we won't -- we're not stupid enough to try to figure prices there? >> that's a leading question. >> it is. >> but the one major explicit price control mechanism in obama care is called an ipad board. and i can't -- i cannot remember this early hour what that stands for. but that one is -- if there's going to be anything that's overturned, it will be the ipad board. neither democrats nor republicans like it. it's -- the board, the --

>> independent payment -- >> thank you. the death panel so to speak. but it looks like it's -- >> you agree with me that the innovation has been stifled by not being able to charge what it takes to develop the drug, right? >> well, innovation is a funny thing. it's not necessarily dollar to dollar. i mean, sometimes you can just drop a soda in a -- you know, a petri dish and get penicillin like fleming did. >> that's not the way we do it anymore. >> yes. there's no actual proof that it happens, but i wouldn't want to take the chance that cutting back on prices would reduce innovation. especially for disease -- >> i'm pretty sure of it. no one cares what i'm sure of. les, thank you, appreciate it. great to see you today. happy new year. polliwog. coming up, a hollywood edition of chairs, man style. after the break, hollywood being held hostage, fiscal cliff stakes, and the words of a

corporate executive. i'm aaron baker, the president and ceo and owner of karen safe. we employ 800 people. we're the manufacturer of residential consumer safes and products. the fiscal cliff makes me uncertain as a business owner. makes me wonder should i expand, should i hire more people, do i need to lay people off? the bottom line, we're at this point because of the lack of leadership. it's an embarrassment how washington's acting. i am begging somebody in washington, step up. be accountable. take responsibility, and solve the root cause of these issues. [ male announcer ] feeling like a shadow of your former self? c'mon, michael! get in the game! [ male announcer ] don't have the hops for hoops with your buddies? lost your appetite for romance? and your mood is on its way down. you might not just be getting older. you might have a treatable condition called low testosterone or low t. millions of men, forty-five or older, may have low t. so talk to your doctor about low t.

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durning. [ male announcer ] this december, remember -- you can stay in and share something... or you can get out there and actually share something. ♪ the lexus december to remember sales event is on. this is the pursuit of perfection.

you've seen the major broadcast networks will go back and look at people who died. a couple guys almost made it to 2013 but well-known actors. they both lived long great lives. jack klugman. remember in 1989, he had cancer. he made it another -- and his voice changed. and charles durning. capitol hi klugman was 90 and durn iing 8.

neither lived in new york where they had big sodas. and neither living longer because of your guy. jack klugman said people think i'm oscar and when they find out i'm not like oscar from the "odd couple" and like us. people think you're very fast stidious, wearing the sweaters, i don't think you're tony randall necessarily. >> a little bit. have never seen an episode. >> you've never seen tony randall? he's so young. >> tony randall and jack klugman, "the odd couple." it's sad. >> i'm a silver spoons guy. >> have you seen "tootsie" the movie? >> i've seen clips. >> charles durning? his most famous movie with bill

murray, hilarious, daffney coleman and jessica -- he won bad picture. charles durning had it bad for dustin hoffman in drag and when he found it it was like a crying game. he loved this woman and wanted her and couldn't understand why she kept rebuffing him and dustin hoffman, you had to suspend disbelief any would want him the way he looked. it was more of a mental love. when he did find out, he was mad. >> a mental love. >> he was mad when he found out charles durning, just like in "crying game" wasn't what he thought she was. >> a quick segue to this story. we have go. it might have been his credit score, dustin hoffman's credit score, a story in the "new york times" today says date, people ask for the credit score, the

equivalent of asking for your sexual disease history. >> i asked my wife for her credit score and sexual diseases. >> and never mind that -- >> people who ask for credit scores are people who have never seen "the odd couple". >> and someone who breaks up with the other one by text and say, it wasn't you, it was your credit score. coming up, a big two hours and prospects for the fiscal cliff and why taxes could be keeping americans from spending. stay tuned. progressive direct and other car insurance companies? yes. but you're progressive, and they're them. yes. but they're here. yes. are you...? there? yes. no. are you them? i'm me. but those rates are for... them. so them are here. yes! you want to run through it again? no, i'm good. you got it? yes. rates for us and them -- now that's progressive.

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president obama heading back to d.c. we're following every development as the clock keeps ticking. retail numbers rolling in. plus investing trends in the new year. ♪ >> we're focusing in on where to put your money as 2013 approaches. the second hour of "squawk box" starts right now. ♪ good morning. welcome to "squawk box" on cnbc. i'm joe kernen, along with andrew ross sorkin. becky quick is off today. is this evans hour? "youngblood?" >> i don't know this song. ♪ >> futures are higher not as much as before. 17 points or so. being up at all with the fiscal

cliff really looking like we're -- why wouldn't we head over. you go back to 39.6 on anybody 250 and above and ride in and lower taxes and be a hero. see republicans vote against that. pre-christmas shopping rush wasn't much of a rush at all, at least not the type economists were expecting. a mastercard spending poll reports holiday sales were up .7 of a percent a year ago well below expectations. and we'll get a fresh read also on home prices when the monthly ca case-shiller report comes out at 9:00 eastern and congress thinks it will show 3.7% in prices for october from a year earlier, continued improvement. and netflix customers were hit by a partial holiday outage, some unable to access the

service from clrm eve through thursday morning. they should have been spending time with the family around the hearth. >> a lot of people do it around the tv. >> unable to download any "walking dead" episodes during the holiday. netflix says the source of the problem was a server operated by amazon web services unit. ready to blame them. >> always amazon. >> always amazon. >> there's the looming fiscal cliff and session of the senate set for tomorrow. the house has nothing on its schedule for the week but members have been told they could be called back with 48 hours notice. meantime, president obama going to fly back from vacation in hawaii today. john joins us in washington. john, is this trip by the president more than just window dressing? is there a chance he's here to actually do something?

>> first of all, merry christmas to everybody and happy holidays. i think this is not window dressing. there is a chance they will negotiate a deal, most like l l mini deal that will temporarily resolve the issue. there is a chance something will get done and the chairman of the budget committee is holding out hope to do that. he's come back because the president doesn't want to be out in hawaii vacationing while members of congress decide up or down on a deal. >> it will be left in the -- he left in the first place knowing he would have to come back. not like he didn't know this problem existed on sunday? >> right. but he wanted to celebrate christmas home with his family, in his home state like most of us do, so he did it. >> his just happens to be further away than most of us.

>> the last time we spoke on friday, i said, is there anything happening behind the scenes we don't know about, conversations we haven't heard about? is there anything right now? did anybody make phone calls on christmas eve, christmas day, this morning that we're getting closer to this baby deal you're talking about? >> i think it's a moot thing. i suspect -- insiders you talk to say there isn't anything happening. usually, i don't believe that because messagesmessages are ge exchanged as the deadline gets closer. what people and the president is counting on is this mood will shift as a result of the holiday, people will come back and realize there will be down sides and costs and anger out there if they don't do a deal

that avoids the cliff and i think they will give it another. really the question has always been and still is, will 3 speaker put something on the floor if a significant chunk of conservatives in his caucus won't go for it and you don't have majority of the majority. if that's the case and he's not willing to pass it with a preponderance of democratic votes we could be in a difficult situation and it won't happen. >> it's dan greenhouse. let's say the speaker goes in that direction and allows it to pass with bipartisan support, does that sink his speaker high pressure? >> not necessarily. that's a risk he would have to take into account. i think the speaker is pretty well regarded within his caucus, compared to say early 2010, when

the whole new class came in, thick he's in a reasonably strong position, but the fact that he was rebuked by his caucus on plan b tells you that you can't count on much at this moment. the question is who would replace him? who would run against him? eric cantor? could he muster a majority within the caucus right now? i kind of doubt it. we'll see. >> i was supposed to see this game sunday, john. >> which one? >> what do you mean which one? what's the most important game coming up this sunday? >> skins and cowboys. >> exactly. i was supposed to see it. luckily we're allowed to switch around. who wants to see jacksonville-10 see. because it's such a big game i have plans for the 1:00 game and now at 8:30, primetime football

for nbc. >> so you're attending the game? >> i was going to. i don't think i can. i'd have to take off the next day and everything else. th they switched it on me. >> without your beauty sleep you can't do it. >> i can't get back here. >> you can do it from d.c. >> we have studios in washington. >> would you sit with me? >> yeah. >> really? all right. >> now we have plan. >> then you would be here. >> you could be here all alone. >> i could be here and you would be in d.c. >> it could work. >> joe, where's your money on that game? will be in redskins stadium. you think i would go there in my big full on cowboy uniform. i don't think so. >> i'm feeling good about it. >> are you? >> yeah. you have a six game winning streak, a game to win the

championship against your rival at home. if you don't win that game you're not going anywhere in the playoffs. >> the great way to do sunday night football, you can get rid of somebody. at the beginning of the season, it could be 2-10 teams, instead they moved the washington-dallas game up. i don't know. let's talk. >> i want to make you jealous a little bit. can i tell you the best critici christmas present i got that definitely topped whatever yours was? illustrated history of dike basketball. >> what? >> illustrated history of duke basketball. i'll loan it to you. >> laettner was at the thanksgiving day parade. >> i saw that. >> he's something. >> a member of the dream team, you remember? >> i remember. >> a lot of sports. fiscal cliff. i don't know what to tell you. i will talk about it more right

now. maybe we'll do that monday but you have to promise we'll be together. the fiscal cliff has been one of the factors holding back consumer spending this holiday season. joining us now, marshall cohen, from mtv group, chief analyst industry. you scoured all of retail to find this. he has pinstripes going. i've heard about stripe on stripes and you have stripes with the cuff links. >> it's all about a blending. >> a blending. there's stripes but it's not too busy. he ae's got the right. >> years ago he commented on my pocket square and trying to work something else. >> people very fashion forward, i want to try to copy. >> you have that tie going

today. that makes a nice story. >> let me ask you. i just had someone not even concede price fixing could hurt innovation with drug prices. do you know absolutely for sure the fiscal cliff hurt retail sales? >> it actually did. it took the psychological factor into the mix. at first it didn't look like it did. consumers respond two weeks before a deadline happens. they didn't get kaupgt in the thanksgiving rush, before christmas that hurt the most. you're going to not buy something on a list for somebody? of course. you are going to buy. what it did do, tell the consumer, think twice before you buy for yourself. when you analyze holiday growth, it comes from self-gifting. i might not have had you on my list but if i saw the perfect tie for you, i will get it. >> self-gifting. >> self-gifting is a huge part of the growth factor.

nobody really counts that. when you look at what a's going on. we groomed the consumer to wait for discounts, no rush to go and no panic in shopping and all those distractions that occurred week to week told the consumer, why bother. >> the fiscal cliff is coming, my taxes are going to go up? >> i don't know what's happening with my taxes, i don't know what's happening with the issue about health care, is this going to cost me more? is my job as secure? these are questions i normally ask consumers, what are you buying on a list for people and who are you buying it for? are you buying one for yourself at the same time, taking advantage for others but they said i don't know where i will be in 2013 and not buy anything. >> no one thinks where tax goes for the 12 month -- >> we know that and the average

consumer doesn't. how does this affect me? they don't think it could be a 5-day issue or 50-day issue. it takes the consumer from being free wheeling in spending to thinking twice. the moment you get them to think twice about buying a product, impulse goes out of the equation. >> if you watch the networks, non-financial networks, the fiscal cliff is treated as a hard stop, world is ending. the average consumer that knows very little about what you're talking about doesn't know there is a process. >> why have we been spending. the past couple of weeks we said it hadn't hit the consumer. when did it hit the psyche? >> i will agree and say consumers don't alter their behavior until a deadline. >> you think we're talking about the last weekend? >> the last two weekends.

we had an extra weekend before christmas and before this one, they had a dark cloud over its head and when the consumer was expected to make a big push and they didn't. >> it's not over yet. we will see discounting entering the total. >> we have entered the second season when retailers clear out and don't have a lot of inventory to worry about and doesn't matter if they sell a lot at the low price. this year, it's deficit and have a lot of inventory. they have gone from managing sales to inventory, that's where the profits go out the window. they want to sell out than sell off. >> more people bought gift cards this year than bought product? >> you tell me, what was on your list this year new and exciting. >> nothing. i wanted socks and shirts. >> you have two things

happening, more gift card because nobody knows what to get you- >> and i returned them. >> and they bought you a bad gift so they frankly didn't know what to get you so they foot go something and you will drive more product. >> for $100 go on a gift card how much doesn't get spent? >> 80% don't spend the money and those that do spend spend 116%. stores do like it when they get you in. 16% never get redeemed, money sitting in a drawer. >> marshall, thank you. >> the big old -- what is that a windsor? >> a windsor. double windsor. >> why? >> you try to change the look. don't always want to go narrow. is that a brioni tie? >> what is this a foreign hand? you will tie that.

>> you've got the dimple. >> the center is the key. >> he has the dimple. >> i have a little dimple. with these skinny tie, hard to do that. thank you for the dimple advice. coming up, future of media. outlook seen on tv. as we head to a break, the u.s. economy held hostage. the fiscal cliff stakes in the words of a corporate competitive. my name is richard phillips. i'm the ceo of pilot freight services. we move the nation's most critical freight all over the world and employee 2,500 people. if the nation fails us and we go over the fiscal cliff, we will feel the impact immediately. capital goods will slow down and we will feel it everyday. we will buckle down and move to strategic advantage. we electude lead, not to follow

the hard left and not to follow the hard right. govern from the middle and lead. little word game. i think your friends will understand. oh no, it's actually my geico app...see? ...i just uh paid my bill. did you really? from the plane? yeah, i can manage my policy, get roadside assistance, pretty much access geico 24/7. sounds a little too good to be true sir. i'll believe that when pigs fly. ok, did she seriously just say that? geico. just click away with our free mobile app. you can stay in and like something... or you can get out there and actually like something. the lexus december to remember sales event is on. this is the pursuit of perfection.

welcome welcome back. checking future, up as much as:30 and now 15. that's where we are at this point. see if anything changes. facebook's instagram program has been hit with a lawsuit,

appears to be the first civil lawsuit resulting from changed service terms and protests about provides. i is this the facebook for young people, instagram? do you know how it works? >> instagram? you take pictures. >> that's not all you do. >> my daughter has -- >> you can share your pictures. >> it has thousands of followers. >> you can have followers. >> like twitter. >> they had a dust-up with their terms and services. >> they did? >> they did. >> when we get to our next segment, jul julian robinson ju tweeted, e-mail box full, asking if i am real. yes, andrew et al., i am. i don't know. >> you don't have an e-mail response. don't have an e-mail response. julian, if you're watching, send me an e-mail through e-mail

opposed to twitter. let's get to media stocks seen a robust 2012 but with more content going digital, it could face challenges and the tv video space facing challenges. will media being able to retain its allure. anthony joins us now. anthony, you're our tech guy, too. do you think julia robinson is real on twitter? >> when you think about twitter and facebook and all these new platforms and digital mechanisms accessing content. this is good for media content. increases the hands from heavyweights like apple, facebook, amazon in terms of tvs and shows and movies. we think moving forward the tablets and devices expands the point of purchase for media and bodes well for media as long as it's not too much content people

cut the cord. >> your topics, cnbc, news corp. and timewarner. i should say we're owned by comcast and i don't see them mentioned anywhere. from what i seen, the stock has been on quite a run. what's the beef? >> because comcast is mostly a distribution company, cable and internet service, i don't cover it. we generally have a barclays has generally positive view on comcast. the theme is tv consent. nbcuniversal owns and distributes a lot of it. cnbc, warner brothers, 20th century fox are the two biggest tv studios in the world. tv content has real value. for me as an analyst, i'm recommending the three companies that own those studio, up side from digital, international syndication, we think it lends itself well to platforms like netflix and hulu. >> where are you on netflix that

people say ultimately will disrupt this business, a fascinating story of the battle between netflix and hbo and windowing that goes on from theater to cable and to on demand. >> sure. we wrote a long report last week called "implications of a netflix strategic change." what netflix is doing is moving towards exclusivity. they're making it they have several shows, maybe "breaking bad" and signed with disney so you must carry netflix if you want to get these exclusive shows. netflix is carving out that niche. when you say the word "disrupt" are they enough to cut the cord on tv that would be a real disruption to the traditional ecosystem. distribut distributors like comcast pay $30 billion in affiliate fees,

that's your cable bill. >> jeff said he wasn't worried about cord cutters, worried about never cords, i don't know the phrase, the idea there's a whole generation that never had the cord to begin with. >> yeah. those are college kids, maybe economic reasons can't find a job, can't afford cable. i couldn't afford cable in college. some economic reasons for that. >> you think it's economic, you don't think it's cultural, the way an entire generation will grow up? >> i don't. cable, still 5 1/2 hours a day of tv. on the margin, you may have some folks that try to string it together to try not to subscribe to cable and there's not enough out there and sports is the hammer that keeps you going. >> thanks. the holiday season traditionally busy one at the box office. this year's winner s and losers

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those are good things. upstairs, they will see fantasy. not fantasy... logistics. ups came in, analyzed our supply chain, inventory systems... ups? ups. not fantasy? who would have thought? i did. we did, bob. we did. got it. we're going to take a quick break now. we have the weekend box office winners all next. ♪ [ indistinct shouting ]

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welcome back to "squawk box" this morning. in the headlines, a new jersey pension fund is suing the new york stock exchange over a deal.

carpenters says the deal undervalues the company, the second such transaction since last week. and samsung is embroiled with another patent dispute, this one not with apple and they seek to ban u.s. sales for some products made by the u.s. ericsson, much like the ongoing battle with apple. and back into office -- >> not the hair. >> what do you mean the guy with the hair? >> did he not have awesome hair? >> his son is -- i can't believe i know this, his son is very popular. >> you saw "lincoln" recently, the shinzo aide? >> a tough morning. >> shinzo had been prime minister in 2006/20072006/2007.

>> and before resigning for health reasons. >> you do it. >> i envy all these governments around the world. i like ones where they have six deficit coalitions that hate each other and try to have a government. >> his finance minister is a previous leader and if something goes wrong with his reign -- >> when clients -- when i need to know about -- >> he does say his health is no longer an issue. i will finish with that. thank you. man, i'm glad you're a cnbc contributor? >> he never ceases to make me feel bad about myself. >> what? you're taking this -- don't cry. have very low self-esteem. >> huge ego but low self-esteem. >> a wicked combo. >> usually ends up in a 12-step program. universal "les miserables"

was the top movie. that's good. >> i thought you were going. will see that one of these day, a movie that opens on christmas day, stars hugh jackm jackman, anne hathaway, and russell crowe, took in $17 million in ticket sales above industry projections and the second best christmas day opening ever. apparently only sherlock holmes that came out on christmas three years ago and quentin tarantino's django got a lot of pre-opening controversy. i like quentin tarantino, a lot of controversial issues. >> the s&p index is down after its loss in 2008. money invested in commodity funds is up 86%.

lang joins us with more on what we're calling the great commodity correction. >> we can call that. despite the index is looking to be down next year, we saw a lot of strong performers. soybean, wheat, saw staggering gains. 38 and 22% respectively. the ag group has seen strength. and lumber, the top performer with a gain near 50%, rising as a struggling u.s. housing market is showing signs of recovery and also supplies needed for hurricane sandy rebuilding. another big winner is gold. it has been under pressure lately, a mixture of profit taking and selling for tax purposes. this year, still up year-to-date nearly 6% and on track for its 12th consecutive year gains. many analysts expecting gold to

rise higher in 2013 amidst the uncertainty. what underperformed. coffee, sugar, cotton, to maim a few. a bit of a supply glut. analysts pointing out coffee and sugar are close to cost of production and suggesting they hit bottom and could present a good opportunity next year. we can't talk about commodities without talking about oil one of the more volatile plays and looks like a decline of 10%. it's stuck in a trading rang and the fiscal cliff causing them to sit on the sidelines and wait for answers with crude. >> i won't give up an opportunity to plug my online show "futures now." i know andrew you will tune in at 1:00 p.m. eastern time. >> i also will be dvr'ing it. >> can you d vrvr the web?

>> might be able to. able to save it. >> may give you a show on cnbc. >> on delanmand. it's on demand afterwards. >> let's check on the trading black, currency and metals. i realized the managing director, we have ralph schlosstein on, i just got a pause, boris slausslaussberg. and cnbc contributor, we talked a lot about yen and euro. you want to talk about that today, boris. >> yes. by the way the guy with the great hair is ckarzumi. he loved elvis. wasn't exaggerating about his hair. >> to show you how much of a geek i am, i was at a steakhouse and i looked, i saw wow, kazumi

was here, must be a great restaurant. >> we're business geeks. that's what impressed you. >> truly am. yen is the story. responsible for the greatest move in the yen in his two months of jobs was more than intervention by boj. at 85 and target of 90 and looks like the boj is starting to come on board and more accommodating. as long as that mean keeps going in the marketplace we seem to be going higher in that trade overnight over the holiday and looks to be strong for the time being definitely. having said this, dhee thing is still fiscal cliff. the interesting thing, citibank came out with it's basically an asymmetrical bet. the marketplace is complacent and thinks the deal will get done. if it does, the euro and yen

goes higher. if it doesn't, positive news, 1% up, negative news, as much as 2-3% down on a shock we don't get anything done. >> what does the fiscal cliff do to what you're watching? >> nothing. i will push back against boris. i think the market knows better. i think the market knows no deal will get done. i think the president coming back from hawaii to show he can't be in hawaii over the holidays while this is hanging over our heads. i don't think anything gets done and i don't think the market cares. >> where do you see evidence e the -- >> we have been sitting at this forever. brent crude at 110. these are high numbers. that's a pretty strong market for one that's about to fall out of bed. you expect them to get something done in the last 18 hours they haven't gotten done in the last 18 months? i can't imagine.

>> why does the market not care if you're right? >> why does the market not care? people are saying there are reasons to own the stock market, irrespective of the fiscal cliff and things coming in the wake of sequestration and expiration of tax cuts actually good, things to embrace. let's embrace good things. republicans should like it. a little bit of fiscal responsibility in here and military budgets no party wants to take on, irrespective of parties. a lot to like. maybe they think bernanke can come in and to a certain degree fix with more stimulus policy and buying of assets. >> i will let boris in here. there's nothing bernanke can do. >> as much as i'd like to do that, i disagree in a sense it isn't going to be a big deal. it is a big deal you have tax

rates going up and spending going down, fiscal austerity and could shave 1% gdp if we leave it as is. they're not going to do a serious deal but i'm looking for a stopgap measure to curtail the worst, the market will feel good. not that the market will look for a grandiose solution, any solution. if it doesn't, you will have a little bit of a shock. >> i'm not an economist. i believe the ccbo says we go over the cliff to a certain degree and recession. i'm a markets guy. this is either the greatest sale in the history of the world or somebody is overdoing the hype on this. either we should be buying puts through this entire process or should be selling oil. >> what do you think the answer is? >> in terms what do you mean

answer? >> you think this is all going down? >> i'm saying the opposite. if they make a deal, i would sell the market. if they don't do a deal looks like you should be buying. the market is showing strength and the noise from washington is not matching. something is out of line here. either our indications of what's going on or the market is telling us is really going on. i tend to listen to the market. that's the one that tells me what's right. >> markets are great except when they're wrong, my greatest fear they're overconfident. i'd love to believe you and hope they're not overconfident and we have this shock january 1st and 2nd and, of course, we know this would happen and somehow the markets react negatively. >> i don't see it. i've been buying putts and short oil. i drink the kool-aid, too. i think this is an opportunity to be short opposed to long. in the end, i'm expecting to be

wrong. so far, i haven't made money, lost money on all these positions thus far. looks like i will continue to as we are getting closer and closer to surely going over the cliff. >> that's pretty against consensus. know it is. >> a lot of time it's the right call. m >> i've been saying for a while in europe, austerity, live beyond your means, you have to suck it up. when it comes to us -- >> that's what you like about this. >> when it comes to us, what? we don't -- taxes going up, spending going down, we don't want to do what we're telling the entire continent of europe to do. >> everybody is talking about a certain amount of fiscal responsibility. here, you get it for free and we're all screaming like this is the end of the world. >> going back to the clinton level tax rate. >> that's all ware doing and you can res tro actively fine tune the things you don't like about

what's going on. >> stop worrying. happy new year. >> happy new year, you and natasha and the schlossbergs. >> coming up, the major financials showing growth in 2012. can they expect a tougher business environment in the new year? we will break it down next. and then the impact on the insurance market and we will talk to eric dinallo, the former new york insurance superintendent. >> my name is allen shortal founder of this corporation. if the fiscal cliff doesn't get resolved no question the u.s. economy will go into recession. we closed down our manufacturing in china and relocated it in the usa. for other companies to follow our lead, they need to trust our leaders in washington will

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financials have been on fire for most of 2012. but interest rates and regulation are still putting some profit margins under pressu pressure. here's what's in store for 2013. >> reporter: after a year's long identity crisis, 2013 will see a spate of bank makeovers. barclay's will spinoff its investment bank. bank of america will review options for merrill lynch. behind these walls, citigroup's investment bank will shrink considerably. if that deal market returns as well as valuations, citibank could sell all its crisis tinged bad bank city holdings. about jpmorgan, it forced ceo jamie dimon to clean house, a doz doz dozen executives leave original changing roles. and mike cavanaugh, the new ceo of the investment bank and not

so dark horse to succeed dimon. battles will brew over regulation. the consumer financial protection bureau will crank down on overdraft fees, a big chunk of bank revenues. two key facets of the fed will reach the finish line and volcker rule completed by the end of the mid-year and the trillion dollar derivatives industry. if any of this hurts competition abroad, expect banks to sue. >> let's see how financials fair. brendan how kin, the director of research at ebn. i don't know if you had a chance to see what she had to say. do you agree with that assessment? >> i did get a chance. i have a slightly deficit take. i certainly agree, banks have been on fire 40% versus s&p up the last six months. they've been terrific stocks

recently. a lot of optimism gets put into these names and i see a lot of headwinds to tensipotentia pote it. >> being? >> regulatory pressure high. and keeping interest margins under pressure. loan demand is still pretty weak. cni, commercial and industrial loan demand is starting to weaken. you have political pressure and uncertainty, which remains high. there's a lot of problems here. one in particular, in regulation, i think is underappreciated here. you referenced it in your spot. the coming central clearing of derivatives mark, i think is a big problem. >> when i say basel-free, people's eyes glaze over, where are you regarding basel-free and what it means to profits? >> a fair question and huge

unknown. we're starting to see some firms begin to reshape their business, particularly on the market side, where a lot of pressure is. there's a busy called fix income and commodities, eeffectively principle trading. it's under attack because of higher capital requirements and volcker giving rules. >> winners and losers under the scenario you're painting. >> pretty much impossible to predict. those with subscale businesses are under the most pressure to change. when those guyss bail, it will improve those who stay in. the biggest winner is jpmorgan chase, the highest winner. >> biggest loser? >> no. biggest winner. >> biggest loser? >> morgan stanley. a subscale thick business and already announced plans to exit some parts of this business, shrink down rdas risk weighted

assets. basel three, a bit of eyes glaze over topic and basically reduces the intensity of that business for morgan stanley and effectively means where they're shrinking it down. there's potential for real improvement here. you have two mikes, mike o'neill and mike corbit coming in and changing over that business. you've now got operators running citigroup. for a while, it was empire builders, lawyers, hedge fund managers. finally we have a bank operator. i think there's real reason for optimism. most positively disposed to. the trouble with citi at this point is this stock has run nicely and not as much discount as it used to be. >> brennan, when this is done are the banks going to wind up

overcapitalized or is the push to shore up the balance sheets more generally going to end up being accurate? >> no question they're going to be overcapitalized. the trouble is you have to kiss the ring of ned in order to get the approval to return capital to shareholders. it's my view the fed, especially right now, given not only the political pressure but recency of the financial crisis, they're going to be far more cautious approving return of capital to shareholders. we will still see the firms the regulators believe in, goldman sachs and jpmorgan, they will still be able to return a good deal of capital. the newcomers to that party, bank of america, citigroup, morgan stanley, it's going to be slow going at first. no one wants to come out like citigroup did last year with too aggressive ask and get denied.

>> thanks. >> thanks a lot. good talking to you. coming up, we're just five days away from the fiscal cliff. can politicians rise above the partis partisan politics to get a deal done before the clock runs out. we will ask democratic congressman jim himes. what kind of bargaining is possible. in 20 minutes, it's blake's 13th birthday. our viewers have known her since she was six months old. we have 20 seconds, probably at 8:10. happy birthday and any who wants to watch it, tune in at 8:10. you can spot an amateur from a mile away... while going shoeless and metal-free in seconds. and you...rent from national. because only national lets you choose any car in the aisle...and go. you can even take a full-size or above, and still pay the mid-size price. now this...will work. [ male announcer ] just like you, business pro. just like you.

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we're we're back on "squawk." earlier we told you about a twitter account that was purported to be julian robinson. well, we have the truth about this account. we have the e-mail from his assistant. i sent a note to julian last night. she wrote, julian flew to sun valley yesterday afternoon and i have not heard from him yet this morning. given the fact that he is technologically illiterate, does not use a computer except through us and barely knows how to make a phone call from his cell phone, i guess it's a safe bet this is an imposter. the writing style is not at all like his. when he checks in i will confirm he has not had an unexpected

technic technological octo-arian epiphany. thank you for confirming that news. >> whoever it was was such a lowlife he tried to answer you when you posed a question whether it was julian? >> is there a way to find someone who does this? >> i think so. you can try to move the market this way and a lot of real problems with this. >> scum. >> hopefully it's not julian, then i wouldn't be saying that. >> countdown on the fiscal cliff, jim himes, and the political strategy of debt negotiations from analysts from both parties. and you really don't want to pay more than you have to. only citi price rewind automatically searches for the lowest price. and if it finds one, you get refunded the difference. just use your citi card and register your purchase online. have a super sparkly day! ok. [ male announcer ] now all you need is a magic carriage. citi price rewind. start saving at citi.com/pricerewind.

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fifteen minutes could save you fifteen percent or more. we're just a few days way from fiscal disaster but still time for politicians to rise above and stop it. democratic congressman jim himes is going to join us. we will ask strategists from both parties what it takes to avoid the fiscal cliff. >> the report of retailers. >> i love the smell of congress in the morning. retailers try to close out on a strong note. the third hour of "squawk box" begins right now.

welcome back. i'm joe concern non along with andrew ross sorkin. becky quick is out today and our guest host is dan greenhouse with the beroni tie and cnbc contributor. just a slip. more frin a minute. first andrew has your good morning headlines. no surprise, the fiscal cliff, both aides or parties saying a partial patch is the most to be expected before january 1st. the session of the senate set for tomorrow. the house, nothing on its schedule for the week but have been told they could be called back with 48 hours notice. meantime, the white house they already got the notice. they say the president is flying back from vacation from hawaii

today. let's take a quick look at u.s. equity features. dow jones looks like it will open up 20 points higher, and s&p 500 over three points. and dow jones, almost 23 points. the new pro business government preparing to assume leadership, the new prime minister shinzo has been putting pressure to raise the inflation target in hopes of extricating the country for two decades of inflation. >> and closed two days for the boxing holiday. >> do due this now? >> i do not do this. >> you justiff them? >> envelopes of cash. envelopes of cash. >> number -- >> a huge step. >> it is actually. >> what do you give to carson, your footmen?

>> the footmen. >> what's a footman? >> the footman does my cuff links. speaking of cuff links. >> you wearing cuff links? >> our good friend, doug s casts not feeling very well today. he is not feeling very well. why daschund? >> he has like nine daschunds. >> we hope you're feeling better, doug, if you're watching. numbers coming in on the holiday season so far less than expected. .7 of a percent and analysts expected sales to go more than 4 percent and nervous about tax hikes due to the fiscal cliff and we have our julian robinson news, that he is a fake -- not he is a fake but the tweet is.

we have been investigating this. it said congrats dick tracy, you must be having a pretty busy day today. >> it's not like it took hours and hours of your time. >> i know. there's not a tlot of news out there post christmas. >> julian would not try to talk about his book this way. >> you can follow me now. did you re-tweet my happy birthday? >> by the way, the fake julian robertson has 3100 followers by the way. >> oh, god. >> joining us to talk about the prospects for a deal to avoid the fiscal cliff, congressman jim himes, democrat from connecticut. congressman, there are some in both parties, i don't know, maybe they wouldn't admit it, they don't think it's the worst thing in the world to go over temporarily.

where are you? >> you know, i think there's some chance we get a deal in the early weeks of january which means technically you are going over the cliff. if you vote on the deal that john boehner couldn't get done in his conference thursday, if you vote on that in january, a deficit deal than december. it's actually a tax decrease. i don't think nothing is going to happen in the coming weeks. it is possible we get into the first week of january before something to vote on. congress has gotten used to doing things at the last minute and it's not exactly clear when the last minute is here. >> i've been saying for a while you don't have to deal with 400 or 500 grand, get 250, what the president has wanted all along and get the republicans to not vote for a tax cut for everybody under 250. why hasn't that been the strategy or can you tell me that

hasn't been the strategy all along? >> the piece of it i don't fully understand why the speaker decided to do what he did last week, walk away from negotiations. they were getting pretty close between the speaker and president and john boehner came up with plan b and it didn't happen. i'm not quiteshi shirure what t detail was about. while the leaders were negotiating we had a lot of time to talk to each other. there is absolutely a deal to be done there. there is 120 republicans and maybe 100 democrats to get you to the 218 that are there to do a deal that looks like something along the lines of what the president and speaker were getting close to. yes, it can be done. the question, can it be done by december 31st, that, i don't know. at the end of the day, it's really a market reaction in

terms of going into january 1st and 2nd and the over all economy is not falling off a cliff. >> he probably couldn't deliver his caucus for that deal you're talking about and had to have been bipartisan and he would have lost the speakership. isn't that the way it works? the nuances to negotiations that involve the politicians themselves rather than the country. >> i actually don't think so. john boehner suffered an embarrassment thursday night. >> at least he suffered it then. didn't have this great big deal we thought would avert everything and get us where we want to go and then not deliver. are you sure the president can deliver everything from his side. >> the deal will look like the budget control act of the summer of 2011 where you get democrats and republicans voting for it. all you learned thursday night is the president can't deliver 218 of his own guys for a deal. this is something the media

isn't really picking up on much. >> the speaker. >> sorry. the speaker. for a deal which was never going to become law. remember, a member of congress, a republican, i know plenty of them, are willing to vote for revenue increases. they say we have this deal harry reid said the senate won't pick up and ask you to vote for revenue increase or tax hike, a lot of republicans will say hell no to that whereas they might vote for the larger deal that stands for a chance of addressing the fiscal cliff. >> congressman, what is the chance we're doing this in february alling to with t ing i together with the debt ceiling and everything combined. >> that is an interesting question. we are talking about the debt ceiling. here, you will see a slight change in style of congress. there is a camp in the republican camp that says let's do nothing until we get to debt ceiling because that

re-established our ledge. there is a movement that the president and congress say we're not going to play hostage again where we get downgraded and the country is on a real cliff and not pay our bills. there is a chance democrats look at republicans, say, fine, don't raise the debt ceiling, the fault of the united states of america will be on your shoulders. i hope we don't get that and get the out-line of a deal in coming weeks. it will have to address everything, tax writing committees and spending committees to do the larger deal, grand bargain in time. the debt ceiling thing, i hope that comes off the table. >> what's your thought on raising the retirement age at any degree, i'm sorry the age of eligibility for medicare benefits. >> for medicare benefits, republicans were running with that a long time. came to realize because what you were doing is you were taking the youngest and least ill of

our seniors out of the system, you didn't actually save much money, right? you raised the medicare age from 65 to 66. first of all, a bunch of those seniors 65 and don't have medicare go on medicaid, another government program and the youngest healthiest in medicare. i don't think it's a good idea in terms of the health care system but doesn't save you much money. >> would you support lowering the age from 65 to 64. >> you lower the able, you're increasing the unfunded liability associated with medicare. during health care reform people said let's eliminate the 65 age and put all americans on medicare. that may have been a simpler idea but the medicare and health care system are inefficient enough that would create a huge long term liability for the government. >> it's great, congressman, you're more reasonable than our libertarian guest host. >> that's what we were talking about earlier. >> i saw it.

the idea you said raising the age -- >> i did not say it. i was advancing the liberal argument because the government can bargain with a larger pool. >> medicare is so -- anyway, congressman heiimes we apprecia your tone and reasoned approach to this. coming up, politics of a debt deal. the grand bargain has faded. >> hold on. we will do that in a second. i am going to do it. >> you want to do it right now. i have been re-tweeting. you have re-tweeted and john r harwood has. we will do it right now. >> let's do it right now. >> you've grown up with my daughter. i will show you, this is when she was six months old, the first thing you saw. she's 13 today. i can't believe how quickly, you probably can't believe it

either. she has been on a million times and we have a book. i want to wish her a happy birthday. she's such a great kid. so is scott, my other kid. i can't believe she's a teenager. there's both of them. i want to wish her a really happy birthday. >> happy birthday. >> there's her party with her great friends. amazing party. there's connor and jaden and i saw richie. heap birthday. >> very very cool. congratulations. >> your kids came on when they were -- >> my kids came on when they were about a year old for halloween as batman and robin. >> that's faber holding her, before he had kids. looks like he thought she would do something right in his lap at the very beginning. check out the reindeer ears. great. >> happy birthday, blake. great 13 years and big life ahead. we're back in a moment. ♪

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welcome back to "squawk box," up about 21 points on the futures right now and just days

to go, andrew, until the cliff. >> there it is. we do have just days to go. what exactly are both sides of the aisle doing. the president and ceo of a polling company and former senior advisor to gingrich 2012 campaign, coming in from new york, david, the former deputy staff secretary to president clinton and cnbc contributor. david, i will start with you, only because i was reading through the notes last night. you said we are dealing with domestic terrorists. that's how you describe the republican party right now. >> i'll tell you, you caught me in a grouchy mood. today, i'm thinking they're like wylie coyote running over the cliff and keeps his feet running before he realizes the laws of gravity apply to him and drag us us to his death. my example goes to this. our polling friend here can tell us the majority of americans really do blame the republicans in the house for taking us over

the cliff, if that's where we go. that's what all the polling shows. it's not as if the republican party at large is helping itself here. individual members at the house in safe districts might fear being primaried from the right. but the party as a whole will suffer from this. it's self-destructive, like somebody blowing themselves up. it's taking small businesses with it. 18 home builders, ceos sent to the president, please do a deal. 13 ceos from the business roundtable signed a letter to the president, just do a deal. all the business community wants, all they want is for a deal to be done. the problem that the republican party in the united states has today what constituency are they speaking to with this? are they really helping themselves as a party or destroying us going over the cliff and taking the rest of us with it. >> let's talk to our polling

friend. >> david, anybody under the age of 40 have no idea who wiley coyote is. >> i'm dating myself. >> i'd like to talk about the fiscal cliff, a very serious issue. i see two things going on. one, you have a president, when he needed to decide what to do with his economy and where to go with tax policy, he didn't ask biden, he asked bush and exte extended the bush tax cuts, exactly where we are today. all he wants to do is not extend them for anybody making over $250,000. if you make over 2$250,000, the first $250,000 would be taxed at the original rate. i want to talk economics. what this is to many republicans is spending cuts. not about the election. the election is over. it's about spending cuts, really what 2010 was about. i think that's where the negotiations go in the next couple of days. >> you think about the polling

and how this polls and issues david was talking about and common ground and who gets blame going over the fiscal cliff, how do you see it? >> i think that's the wrong question to ask. we're not in a political season. we either need the country to function or we don't. >> we will be. in 12 months from now, we'll be right back it an again. whatever happens over the next three weeks will be part of some campaign 12 months from now. >> i would rather worry about principle than politics and the republican party has very few principles left. one not to raise tax and the other extract serious spending cuts. you have a bunch of democrats we lost the whole point, you have the democratic party for 10 years, they have been willing to go for tax cuts and they voted for that. >> that's factually wrong. in any time you have an individual -- they didn't vote for tax cuts under bush and your president didn't welch and extend them two short years ago.

>> just last year, a trillion dollars of spending united stat states -- spending cuts we are enacted by the house they voted for. >> the obama deficit. >> you cannot point to democrats and say you're not supporting spending cuts, rite in the president's offer. what you don't understand, i think, is that boehner won't bring this stuff to a vote because he knows the majority of house members, democrats and republicans combined actually want to support a deal as those 200 plus ceos want. what he's doing is political self-preservation, he thinks, because if he doesn't get a majority of his majority under the old gingrich practice, he thinks he will lose his speakership. the country should come first and boehner should bring it to a vote and if he doesn't, he should not be speaker of the house. >> where is the hunt over the next few days for compromise.

if you think it's doable, maybe david won't be happy with it but happy enough. >> probably exactly what we've always been talking about, taxes for $250,000 and above and serious spending cuts and any promise on either the debt ceiling and/or medicare. >> do we get a promise on the debt ceiling? what do we get? >> yes, probably a year on the debt ceiling. >> a year on the debt ceiling. otherwise we're back in the soup in february. >> we will be back in the soup in february. would you like to have a senate with 30 hard core conservatives or a majority of 55 that vary? >> we don't have either. we have something in between. i'm a big states rights person. i think the people in each state should elect who they want to the united states senate. i will make the point, this entire election has been overshadowed by a couple of republican senators who lost. the establishment picks lost even more thandily. there were five or six people

for whom the entire primary field was cleared. they were awful candidates, overfunded, underwhelming candidates. we ought to take a look at the fact candidates matter and campaigns matter. i believe the party needs to have certain principles. the biggest party of my party is staff infection and three poisonous words, he can win and he can win. bill clinton, jimmy carter and barack obama all have three important things in common. they were all told you can't won and they all won and all brought in new people to help them win. the republican party suffers from the opposite problem, the same marion et people pulling the strings. you can get fresh faces in the front. >> you mean -- >> called staff infection. if you have the same people running the show every time. nobody knew who james vcarville was and joe, before president clinton chose them. they don't want to be known. >> these people will all get

jobs? >> they're perfectly fine people. the party itself, we're only looking at a couple of candidate loss this time. and you will have me back and my good friend, david, back, too. the republican party listens to the three words who can win, already talking about who can win in 2016. voters don't ask who can win, who can lead, a very different question. >> thank you for providing fodder for this conversation. >> i like the sporty outfit. >> and the outfit. >> i'm in new york today and feeling sporty. >> merry christmas. thank you for coming in. the fiscal impact on the insurance industry. eric will join us, a former insurance superintendent for new york state. the bter you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more.

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welcome back to "squawk box" this morning. the folks at starbucks are joining our call to push politician towards a fiscal cliff solution. starbucks employees in the washington d.c. area are being told to write "come together" on every cup of coffee they serve between now and friday. doesn't that sound suspiciously like rise above? ceo, howard shulchultz, often a critic put it out this morning. we head to chicago for a look at what traders are watching. the retail rush is over and the

rush of gift cards mean customers will be returning. nn . or you can get out there and actually share something. ♪ the lexus december to remember sales event is on. this is the pursuit offection.

welcome back to "squawk box."

this morning, we will get the latest read in home prices. expecting to show a 3.7% a year gain from house prices in the 20 largest markets. also in the news, herbal life is retaining a law firm as it tries to fight off accusations from investor bill acman and they have now hired someone else. ackman claiming they have malicious schemes and they say his claims are nothing more than attack. and ticket sales on christmas day, "les miserables," the second biggest. is that true? i thought it would be bigger. behind 2009 sherlock holmes and django and chains, the second biggest. more from chicago.

good morning to you, rick. >> hi, andrew. >> what's your sense? post christmas, no cliff, the president's on a plane back. >> let's start reverse. first of all, i'm kind of shocked the president is on his way back to be honest with you. i think that's a good thing. maybe we will get some movement. my button is upstairs. m i will still keep wearing it the rest of the day. a lot of interesting things. you read some of the op-eds, you probably read a deficit op-ed section than i do. >> i read the "journal" op-ed section because i know joe reads it and you read it. >> we just read a different one first. here's what i think, when it comes to just wind subsidies. none of us want to go off the cliff. there is a point i don't want to turn into a government strategist. some of our guests get to a

certain point where their allegiance to a certain ideologically trumps common sense. as bad as a fiscal cliff may be, i think to get so very little coming at it this late in the game, there are certain aspects to it i think are almost a bit refreshing like letting things sunset, like certain subsidies for wind after all these years. this is at the epicenter of the philosophy what's different between a for profit business and government run enterprise. that is it's hard to fire people and hard to close certain lines that don't make money. things the private sector has to do or not proud of or doesn't like. the government, easy. let's put it off. it's not their money. they don't feel the same intensity handicapping whether something should continue or not. these are things we need to grapple with. if we just have rigid

ideologicallies, under no condition go over the cliff we become another aspect of the propaganda i'm so sick of that reached its crescendo at midnight november 5th. >> the way i think future generations, if i were to write an economics book, the way that fracking and horizontal drilling, we start with, you know, the notion we're running out of oil, it's going to be gone, we need the government to create the next energy industry. we will spend all this money on these renewable things. it will be great. we know how to do it, we have experts. then a disruptive market driven technology comes along that generates $2 natural gas makes all that stuff or basically puts it into the future and the money just went down the drain. a case study the way dwogovernm planning and infrastructure

spending, you will get 10 cents of every dollar you spend, basically. that should be in a future book, shouldn't it, to show you the way? we have to learn it again and again. >> it should. as your kids get older and my kids are at that age, it should. as a you start to see some of the school's syllabus for business classes and marketing classes, what you will learn, joe, making a profit is the last thing any of these classes want to teach. >> it's a dirty business. >> there was a time 4 or 500 years ago a middleman marked something up, that was supposed to be a bad thing. supposed to have a zero-sum game between buyer and serier and i thought we all learned about it and we haven't and have to learn it again and again. >> remember something. as we get towards the end of the year and the post myan calendar,

a lot of great tv on channels, like cnbc at night, you look at some of their post programming. i guess the long and short of it is this, over the last couple hundred and a half years, you look how man has advanced even though the thousands years before that he's gone nowhere, what is the reason why? freedom. if we let the government pick winners and losers, our freedom gets less and less and strategists for democrats and republicans gets bigger and bigger, not tethered to reality, tethered to repetition, hopefully watching us will understand. you can say things a thousand times but doesn't make them true, correct or accurate. >> rick, thank you for that. merry christmas. >> thank you, andrew. i tell you what, every week we should score what we think our top five op-eds are and i'm curious to see which ones intersect. >> i would love that on fridays,

2013, my new resolution. thank you. christmas has come and gone but returns and holiday gift cards ensure the busy season isn't over. cnbc's jane wells joins us now. you're not in pajamas. joins us now with more. >> how would you know? a nice big coat. >> your ticker says your dreams all came true, i understand. >> we will get to that in a minute. i'm at the grove in west l.a. i don't think we're west l.a., kind of l.a.-l.a. here, near television city. december 26th may seem like the ghost of christmas past. it really isn't. this is still a big day because of gift cards. retailers, this is the day they start redeeming the cards and hope people spend extra. 30% of people receiving gift cards plan to spend at least $25

more than the total amount. gift cards were growing double digits annually until the recession when it stopped. >> it's clearly rebounded and beyond the previous levels it had been at before the recessio recession. >> i think more of this year. again, it's like a lot more convenient. >> they're convenient and fit in the card and easy to take in the plane to go home to. >> like wal-mart, places like that, they have a big selection of things. >> macy's or jc penney's. >> if somebody give it to me, i spend it. >> see, if somebody give her she spend it. brian riley expects gift card sales to grow 10% this year to a record 1$110 billion and top $10 billion by 2015 way above predictions.

electronic electronics growing $3 billion to $16 billion by 2015. later on, find out which retailers sell the most gift cards and why some say it may be better to have a store branded gift card than one from visa or mastercard. >> let's see them. do we get to see them? >> okay. so what did i say on monday i always get for my husband for christmas? >> pajamas. >> all right. show the picture. i open it up yesterday morning and i burst out laughing. he said, why are you laughing? i said, well, you don't know this because he never watches me on television, whatever, that's nice, he just likes the paycheck. i said i told everybody on live tv you would buy me pajamas. he looked hurt. i said, i like these ones because those are ralph lauren. he has really improved. i do like the pajamas and i will keep them. then he made an amazing prime rib from costco and cleaned up,

so it was a merry christmas for me. >> awesome. you know what, we need a happy ending. you do have one. he should bring you with him maybe. i'm never trying again without -- i will give people what they want. isn't that throat way to do it? >> or get a gift card. >> i hate getting taken. we just found out only 84 cents of a gift card ever gets spent. i hate that idea. >> that has actually -- brian riley says the so-called spillage is much less than that. he says it's gone down 2% of unspent works out to 1.7 -- >> for a gift card to the wife, jane, ew, how romantic, unless it's a really big one to the right place. >> there you go, in a blue box. >> fredericks or something. just kidding.

that would be my present. jane, thank you. those didn't come from fredericks either. that's kind of conservative for -- let's just leave it -- i won't go there. anyway -- >> yeah, don't, you already said happy ending. >> you're right. i did. all right, jane wells, thank you. coming up, days to reach a debt agreement, both sides now focusing on what happens if we go over the fiscal cliff. former new york state insurance superintendent will join us next.

welcome back to "squawk box." futures, we have green arrows. s&p 500 a little over two points. and that is days before the u.s. crosses the fiscal cliff. joining us now on set, eric dinallo e, the former new york state insurance superintendent. you have lots of deficit perspectives on this, perhaps from the insurance sort of angle. you were saying during the commercial break, you have a political view on this as well. >> i'm now convinced, this is very very cynical. it's easier for politicians who signed up on that pledge, they can go to their voters and say i didn't vote for a tax increase, i voted for a tax increase. if they go in over the cliff, it

comes in automatically. >> the public is that dumb in 2014 people running campaign commercials? >> the headlines are simple, did not vote for a tax hike, tax increase and people couldn't get their house in order and that's the story and how simple sometimes politics are what you can say with a straight face versus not. >> you were here three or four weeks ago talking about insurance implications for insurance companies. and where we are now, insurance companies, will this change their business? >> i don't think it changes their business in the short span. i think it is a stepped out process. if the rating agencies look at this and think the government just can't get its fiscal house in order state, local and federal and insurance companies are the largest owners of corporate and government debt, i could see them thetening or talking about increased down grade, not so good and you have to think about capitol hill

requirements. i think we're in a good place now. a year from now, things haven't been clearly solved, not so good. >> you spent a lot of time with rating agencies by your role with the insurance agency. do you think there would be a down grade? do you think there really would be? >> it's possible. they're looking to regain their credibility they lost to a great degree. thick that causes overreaction and want to have diligence. i don't think they are actually responsibility but it's tough. >> what is the conversation like behind the scenes when the government has to talk to the rating agencies. you did this. >> i did a lot of it. >> they're sophisticated but not all knowing obviously. they do things in a rough estimate. we're dealing with aig and bond insurers. the numbers were big. 10 billion, $15 billion chunks.

even when aig, this is in the book, even when aig had lines of credit and we said they will access the lines of credit, it still was a ground for them to do the down grade. when they're set on something, it's very hard for them to change their course. >> the last time they were downgraded last summer, you had tim geithner physically having meetings with them? do you think this is something they would push off or do in the mich midst of all this? i heard speculation, you could see moody's or somebody come out on january 3rd if we didn't have a deal. does that make sense? >> it makes sense they send a warning shot and put them on a watch and that's the way they communicate some time frame. i think they don't want to go back and forth and upgrade or down grade. >> what do you think would happen if there was a warning

shot, moody's says we're very displeased by what's going on in washington and now putting this on negative watch or whatever. >> double secret probation? >> the next company, the next rating instrument will be fish. they already fired a warning shot. they said several months ago, the childish nature of your politics is -- i'm paraphrasing. the childish nature of your politics is sufficient means for a down grade. i don't think january 3rd or 4th anybody cares. the rating agencies understand voting for a tax decrease is easier than tax increase. if this drags on to late january, the president is talking about using the inauguration as a forum to bash republicans, if this goes into february, they could come out irrespective of a deal going forward, aaa doesn't act like

this. >> i think it's a problem if -- first of all, we don't get there. then there are down grades. that begins to sit in on corporate holdings. >> this is broader than insurance, major markets and holders. >> insurance is such a huge holder of corporate and municipal debt. the other thing, i think is interesting, i heard from the governor, i heard a statistic that rocked me back when i heard it, said in 2012, the first person to live to be 150 years old was born. think about the implications for that around annuities, social security, the medicare system. a lot of this is really not around poor management. i heard people saying it's been mismanaged. people are living so much longer than we ever expected. the retime ages set in 1800s. that is to a large degree what

private and public sector management has to be about. insurance company, social security, government, retirement plans have to confront the fact that you know my children are going to be hanging around -- >> do you think insurance models don't work? >> i think they work. it has to be calibrated. >> you have to put the right numbers in now. i hope it happens before then with designing organs specific to yourself. all these things are theoretically possible. >> you saw klugman and charles durning, 90 years old. f he's taking credit for people living -- absolute power corrupts absolutely. >> i do smoking has had a huge impact. second-hand smoke had a huge impact.

these things really do matter and give credit where credit is due. >> i went to a lunch, a huge business lunch. there was wine there. i don't think one person actually took a sip of wine at lunch. do you remember the way you people used to -- when i was in the brokerage business, people drank martinis at lunch. it wasn't quite "mad men." i wasn't there for that but totally deficit. healthier lifestyle, people try to stain shape. >> journalists used to keep it under their desk. not in my time but old days you hear it. part of a whole -- blue dollar thing. >> you're telling me when leisman and santelli go out, they're not both drunk? >> they're living in a deficit time period. thank you for being here.

coming up labor disputes that could disrupt the northwest. when you fall behind on global business news, you make bad investment decisions. when you make bad investment decisions, you lose all your money. when you lose all your money, you're tempted to enact a ponzi scheme, and you wind up with this guy. don't end up with this guy as your cell mate. watch "squawk box."

welcome back to "squawk box." futures setting up nicely. dow opening up about 15 points higher. nasdaq up a little over a point. some headlines this morning. netflix customers can once again stream video. the service went down midday christmas eve and was out until yesterday on christmas day. netflix comments on problems with amazon's online services. dock workers at four pacific

northwest ports have moved closer to a clanch with grain shippers. the parties are in a separate dispute at 15 east and gulf coast ports agreed to mediation. those ports face a strike deadline set for december 30th. >> coming up, our guest host this morning has been dan greenhouse. we'll give him the last word when squawk returns. tomorrow, on "squawk box," time is running out for lawmakers to avoid the fiscal cliff. and the consequences are dire. >> if we go over the fiscal cliff, i have to react. so i know where i need to pull back. >> can congress agree to a compromise deal before the end of the year? tune in to "squawk box" tomorrow at 6:00 a.m. eastern for up-to-the-minute coverage for the fiscal cliff talks. time for citi price rewind. because your daughter really wants that pink castle thing. and you really don't want to pay more than you have to. only citi price rewind automatically searches for the lowest price.

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you can stay in and like something... or you can get out there and actually like something. the lexus december to remember sales event is on. this is the pursuit of perfection. let's get back to our guest host, dan greenhouse for the last word. so we go over for a while? >> a tax cut at some point, but it's basically kicking everything down the road. we'll get spending cuts, we'll get -- >> listen. one thing we talked about earlier this morning is the fact that washington is incapable of doing anything. sometimes their hand needs to be

forced. i don't particularly like the fiscal cliff in terms of its composition. but there's little doubt that if your number one concern is the short to medium term deficit, cutting taxes will do some of that. more than what other people are talking about. in that regard, there is, i guess, some silver lining. but again, it's never going to stay. what do they replace it with, who knows. we're going to go into the inauguration, i think, it looks like at this point. >> other than that, how does the market look? >> we're pretty optimistic here, despite everything that's going on. the stock market continues to power higher. the economy continues to power higher. power is not the right word, but things are getting better. if we can get past this childish, foolish debate, it's certainly not the worst environment we've ever seen. rick santelli brought up something about how he insinuated capitalism has unleashed the global economy over the last 200 years.